P11D Explained: tips for completing your P11D

What is a P11D?

Currently a P11D is a form that must be submitted to HMRC by an employer annually for each member of staff (including directors) that receives certain benefits and expenses considered taxable by HMRC. Based on the current information, a P11D will be required for 2023/24, 2024/25 and 2025/26. 

The benefit values shown on the form enable HMRC to review the employee’s tax affairs for the relevant year to check that the correct amount of tax has been paid. It also allows them to update an individual’s tax code for the following year so that regular tax deductions will be closer to the expected overall liability.

The following list is not exhaustive but includes the types of benefits typically reported:

Where an employer chooses to ‘payroll’ the benefits of employees (if possible, as some benefits cannot currently be payrolled),  i.e. tax them along with employees’ monthly/weekly pay, these benefits do not need to be recorded on a P11D form.

The forms must be submitted to HMRC by 6 July annually and, in addition, the employer is also required to complete and return the P11D(b) which calculates employer Class 1A national insurance contributions which is due on certain benefits. There are penalties for filing late or incorrect P11Ds. As of March 2023, HMRC no longer accepts paper P11D filings – all submissions must be made online. 

A copy of the P11D form should also be given to the employee to enable them to complete their income tax return, review their tax deductions and/or allow them to prepare claims for tax relief.

Find out more about how our P11D software can help streamline your reporting, and enable you to file online direct to HMRC.

Tips for your P11D reporting

    1. When reporting benefits to do with events, remember

  • HMRC accepts that no taxable benefit arises on an annual event if the cost (including guests) does not exceed £150 a head including VAT. 
  • The £150 a head limit may apply to more than one function during the year if the total cost of the functions does not exceed £150. For example, if there were three functions in one year costing, say £80, £60 and £40 per head respectively, it would be possible to exempt the first two (as the total is under £150) and pay tax on the £40 function. 
  • If the cost of a single function exceeds £150 per head, an employee will be taxable on the total cost (not just the excess).

    2. For the events exemption to apply, it must be a formal annual function, not just, say, an informal drink. 

    3. Informal events such as an externally hosted zoom quiz for staff may fall within the ‘trivial’ benefits rules.

    4. With cost-of-living difficulties continuing, your business may have provided some extra benefits for employees. While some may fall within the exemption for ‘trivial benefits’, others such as shopping or         restaurant vouchers must be reported. 

    5. Make sure you have efficient filing processes and robust data collection methods – the P11D reporting deadline is 6 July, and there are penalties for late filings.

    6. HMRC no longer accept paper filings. Make sure you have software and processes in place to meet your obligations. 

    7. Making a cheap loan available to an employee can give rise to a taxable benefit in kind but there are some important exemptions – find out about P11Ds for loan benefits.

    8. Accurate tracking of car and van benefits can be a headache when it comes to completing P11Ds – read everything you need to know about P11Ds for cars and vans.  

Streamline your data collection, get customised reporting and identify errors. Simplify your P11D process – get the P11D software trusted by top accountants.

Published by: Michael Hepburn, Senior Manager – Employment Tax

The statutory exemption from tax and NIC for trivial benefits costing £50 or less means there is no need to report qualifying ‘trivial’ benefits on P11D forms. Many employers have started to give small items to staff (for example, at Christmas instead of a staff event) so it is important to make sure that the exemption applies. 

There are four qualifying conditions that must all be met:

  • The benefit is not cash or a cash voucher
  • The cost of providing the benefit, or in some circumstances the average cost per person of providing the benefit, does not exceed £50
  • The benefit is not provided through a salary sacrifice arrangement or any other contractual obligation, and
  • The benefit is not provided in recognition of particular services performed by the employee in the course of the employment or in anticipation of such services.

The exemption applies equally to benefits provided to the employee or to the employee’s family or household.

If the employer is a close company, and the benefit is provided to an individual who is a director or other office holder of the company (or to a member of their family or household) the exemption is capped at a total cost of £300 per tax year. If any of these conditions is not met, the benefit is taxed in the normal way, subject to any other exemptions or allowable deductions and it must be reported on a P11D as appropriate.

Streamline your data collection, get customised reporting and identify errors. Simplify your P11D process – get our P11D software

Published by: Michael Hepburn, Senior Manager – Employment Tax

Some company owner/directors make use of luxury assets owned by their company, such as boats, classic cars or holiday homes. It is vital to make sure these benefits in kind are reported correctly as HMRC frequently search for such items during compliance checks.

Box L: Assets made available to employees without transfer

This is not the most common type of benefit in kind, so if you have not come across ‘assets made available’ for a while, don’t forget there is a detailed method of calculating the taxable value (cash equivalent) of an asset provided to an employee which is made available for private use. 

Information required

You will need a clear description of the asset and the market value (in most cases, cost) when the asset was first applied as an employment-related benefit. This does not apply to land. For land, the rent that might reasonably be expected to be obtained on a letting from year to year is required. Then you will need to know the amount of salary or cash pay foregone by the relevant employee under Optional Remuneration Arrangements rules and any amount made good by the employee or that has suffered a tax deduction.

Calculating the benefit

1. Start with the annual cost of the benefit of an asset (but not land): 20% of the market value (for land, the annual cost is the value of rent and the following steps do not apply).

2. Deduct any amounts for days when the asset is unavailable for private use. This is calculated pro rata and will include:

  • The day before the asset is first available, and the day after the asset is no longer available
  • If for more than 12 hours in any day, days when:
    • The asset is not in a fit condition to use, or
    • An unconnected person has possession of it by way of a lien over the asset, or
    • The asset is used in such a way that is it is not being used by, or at the direction of the employee or director (or their family or household), or
    • A day when the employee or director is obliged to and actually does use the asset in the performance of their duties, and does not use it privately.

This means that if on any day there is both private and business use, the ‘unavailable for private use’ rules do not apply.

3. Where appropriate, apply the sharing rules. Where an asset is available to more than one employee or director (including their respective family and household) for private use at the same time, the benefit is first calculated for each employee and then reduced on a just and reasonable basis so that the combined total for all is no greater than the annual cost of the benefit.

Practical points

  1. Accommodation, cars and vans are chargeable using special rules and are reported in other sections.
  2. Where assets are not available for private use for specific periods, it will be important to retain detailed records of each period and the reason why the asset was not available.
  3. No benefit arises on mobile telephones where only one is provided per employee - unless the mobile is provided through an OpRA arrangement.

Streamline your data collection, get customised reporting and identify errors. Simplify your P11D process – get our P11D software

HMRC have announced from April 2026 the reporting and paying income tax and NIC on benefits in kind will need to be done through the payroll. It is not yet clear if this will apply to benefits that cannot currently be payrolled (credit cards, accommodation, and loans). There are also other practical areas to be clarified, including:

Current UK tax law says that employers cannot deduct more than 50% tax from employee’s salaries, what do employers do when this blocks full payrolling for an employee?

What happens to the current requirement to for employers to notify HMRC of the Class 1A liability on employee benefits - the P11D(b)?

Will HMRC be able to change its systems to ensure that the tax code of everyone who currently has a BIK restriction is updated correctly for 2026/27?

Published by: Michael Hepburn, Senior Manager – Employment Tax

Where an employee agrees to a reduction in gross pay in return for their employer providing a benefit of some kind these are known as Optional Remuneration Arrangements (OpRAs) and there is a prescribed way that the benefit must be valued. This applies to calculations for cash allowances (such as a car allowance), flexible benefit packages with a cash alternative, and standalone salary sacrifice and salary exchange schemes.

How the OpRA rules work

Where an employee has benefits in kind, under the OpRA rules, taxable figure for P11D purposes will be based on the higher of:

  • The amount of pay given up by the employee, and
  • The taxable value of the benefit in kind.

This applies to all benefits in kind, including those previously exempt from tax, except for some specific exclusions including:

  • Employer pension contributions
  • Pensions advice,
  • Childcare vouchers and employer-provided childcare,
  • Cycles and cyclists equipment under the Cycle to Work scheme, and
  • Cars with emissions of 75g CO2/km or less.

Note that where a cycle is provided under a Cycle to Work scheme, the requirement to undertake ‘qualifying journeys’ on the cycle is no longer applicable and OpRA exemption can still apply. 

Streamline your data collection, get customised reporting and identify errors. Simplify your P11D process – get our P11D software

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Other Employers Year End Reporting deadines

P11D reporting is just one of the deadlines that employers need to be aware of for 2024. Read our guidance on how to ensure you have accurate data ready in time to meet all the reporting deadlines: Employers’ Year End 2024.
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